China Economy

Since China began to open up and reform its economy in 1978, GDP
growth has averaged over 9 percent a year, and more than 800 million
people have lifted themselves out of poverty. There have also been
significant improvements in access to health, education, and other
services over the same period.
China is now an upper-middle-income country. Although China has

eradicated extreme poverty, a significant number of people remain
vulnerable, with incomes below a threshold more typically used to
define poverty in upper-middle income countries.
China’s high growth based on investment, low-cost manufacturing and

exports has largely reached its limits and has led to economic, social,
and environmental imbalances. Reducing these imbalances requires
shifts in the structure of the economy from manufacturing to high value
services, from investment to consumption, and from high to low carbon
intensity.
Over the past few years, growth has moderated in the face of structural
constraints, including declining labor force growth, diminishing returns
to investment, and slowing productivity growth. The challenge going
forward is to find new drivers of growth while addressing the social and
environmental legacies of China’s previous development path.
China’s rapid economic growth exceeded the pace of institutional

development, and there are important institutional and reform gaps
that China needs to address to ensure a high-quality and sustainable
growth path. The role of the state needs to evolve and focus on
providing a clear, fair and stable business environment, strengthening
the regulatory system and the rule of law to further support the market
system, as well as ensuring equitable access to public services to all
citizens.
Given its size, China is central to many regional and global development
issues. Although not the main source of historical cumulative
emissions, China today accounts for 27 percent of annual global carbon
dioxide and a third of the world’s greenhouse gas emissions – with per
capita emissions now surpassing those of the European Union,
although slightly below the OECD average and well below the level of
the United States – and its air and water pollution affects other
countries. Global environmental problems cannot be solved without
China’s engagement. China’s growing economy is also an important
source of global demand. Its economic rebalancing will create new
opportunities for manufacturing exporters, though it may reduce
demand for commodities over the medium-term.
China is a growing influence on other developing economies through

trade, investment, and ideas. Many of the complex development
challenges that China faces are relevant to other countries, including
transitioning to a new growth model, rapid aging, building a cost-
effective health system, and promoting a lower-carbon energy path.
Following China’s swift reopening after the COVID-19 outbreaks in late

2022, GDP growth is expected to rebound to 5.1 percent in 2023, from
3 percent in 2022. Growth will be led by a recovery in demand,
particularly for services. Investment is expected to remain robust,
supported by slower but sustained growth in infrastructure and
manufacturing investment, as well as the gradual stabilization of
property investment. Net exports are expected to weigh on growth, due
to softer external demand coupled with a modest acceleration in
import growth driven by the increase in domestic demand.
To support the ongoing recovery fiscal policy is expected to remain

expansionary, albeit less so than in 2022. Monetary policy is likely to be
relatively accommodative, and policy easing in the property sector will
be maintained in 2023.
Over the medium term, China’s economy continues to confront a

structural slowdown. Potential growth has been on a declining trend,
reflecting adverse demographics, tepid productivity growth, and rising
constraints to a debt-fueled, investment-driven growth model.
Structural reforms are needed to reinvigorate the shift to more
balanced high-quality growth.

China Economy

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China Economy

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Since China began to open up and reform its economy in 1978, GDP

China is now an upper-middle-income country. Although China has

China’s high growth based on investment, low-cost manufacturing and

China’s rapid economic growth exceeded the pace of institutional

China is a growing influence on other developing economies through

Following China’s swift reopening after the COVID-19 outbreaks in late

To support the ongoing recovery fiscal policy is expected to remain

Over the medium term, China’s economy continues to confront a

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